The overall logic is simple. A traders buys something that he believes will increase in value, and sells what he believes will decrease.
For example, today the Euro is worth 1.2345 US Dollars. In all his wisdom, a trader believes that it will increase in value in the next 24 hours. The trader places a BUY order today and waits. The next day the Euro is worth 1.2395 US Dollars and the trader closes, securing a 50 pip profit. How much cash that is depends on the volume of money the trader invested in this particular trade. It could be 50c, it could be 50k.
Reviewing the process in more detail, though, reveals why things are a bit more complex than that.
Let's start from scratch.
After an exhaustive research about the types of brokers, account types and trading styles, an aspiring trader sets up and funds a trading account. Multiple trading instruments are now at the trader's disposal to start Forex trading online. Whether one is looking to trade a particular currency pair, like EUR/USD, or a particular market situation, like a key level break out, a trader must prepare for a Forex trade.
Haste is strongly discouraged, although it might be consistent with certain trading styles or trading situations.
Analysis is key and may include as many points as the trader sees fit - but one of the most basic approaches would be: exact market conditions to enter a trade, money management, assumed duration of the trade, volatility forecast for the period in question, proximity of relevant economic events and - most importantly - conditions to exit a trade. All of this consideration ought to be done before any trading action takes place
Once again, analysis is the key in Forex online trading. It works well for the trader's psyche and account balance. The ability to find, analyse, summarise and apply information is Forex trading. Mastering these disciplines is what makes a difference between success and failure in online trading.
Once all preparations are done the actual trade takes place by a click of a mouse in specially developed software, commonly referred to as the trading terminal or trading platform. Clicking is the least important part of trading.
